Course: International Business

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Case Study-1

In 1990s Nestlé faced significant challenges in its market growth. Despite of the stagnant population in western countries the balance of power was increasing from large scale manufacturers like Nestlé, toward supermarkets and discounted chain stores. In result, Nestlé decided to lessen its focus on developed markets like North America and its home based market in Switzerland to emerging market like India and China. The driving force behind the decision of expanding its market share in emerging market is simple, as the population grows and government decisions favoring market economies brings attractive business opportunities for public living at intermediate income.

Although many of the counties are still living under poverty line, even living on $1 per day shows optimistic signs for the future markets. For example: as the current economic forecasts continues, there will be 9 billion people living on this planet as compare to today’s population of $7 billion today, and coincidently the increase in population is all in developing countries. Nestlé uses the strategy which correlates the ratio of increase in income to use of branded food products, which means as a person earns more and has less time for making food in his/her home, they will automatically substitute for branded products.

In general the company’s strategy has been to enter emerging markets early before its competitors and build a substantial customer base by selling products which suit the local population such as infant formula, milk, and noodles. Nestlé narrows down its market share to many small niche markets, as opposed to general or one for all strategies. Nestlé keeps the goal of commanding the niche markets by gaining at least 85% of market share in every food product it launches. For example, by pursuing such a strategy, Nestlé has taken as much as 85 percent of the market for instant coffee in Mexico, 66 percent of the market for powdered milk in the Philippines, and 70 percent of the market for soups in Chile. As the income level rises in each niche market, Nestlé introduces an upscale version of the same brand to increase its profit level. Although Nestlé has become a global brand, it uses local identity to gain exposure in local markets. The company owns 8500 brands but only 750 of them are known internationally.

Customization is the key to Nestlé’s global brand identity rather than universalism, which means Nestlé, uses global brand identity but, from the internal point of view, it uses local ingredients and other technologies that resonate with the local environment and brand name that is known globally. The customization of Nestlé’s products causes many hindrances in carrying out its distribution of products from local farmers to factories. For example, in Nigeria the infrastructure placed is crumbling, trucks are old and political conditions are not suitable to carry out the processes successfully, so Nestlé adopted a new strategy to deliver its products to local warehouses which are Loco convenient to local farmers for milk production. Although this might

seem as an expensive solution, the local farmers have tripled their milk production and the supply of milk, which Nestlé has calculated as beneficent for the long term growth.

The execution of the strategy matches the planning of the strategy which is to plan globally and implement locally. Nestlé gives autonomy to its local branches based in different countries to make pricing decisions, and distribution decisions. Nestlé has expanded its growth by diversifying its product base to tomato ketchup and wheat base products such as noodle and tofu. Nestlé has expanded into 5 countries and expects to supply all food products throughout the regions namely, Turkey, Egypt, Syria, Dubai and Saudi Arabia.

Nestlé is also buying local companies in China and adapting its own portfolio for the Chinese market. Since many Chinese find coffee too bitter for their liking, Nestlé is working on a new “formula” to offer Smoovlatte, a coffee drink that tastes like melted ice cream. The company wants to be seen as a company that makes healthy food. As Janet Voûte, Nestlé’s global head of public affairs, said “it is a core business strategy”.

Nestlé has used its brand name as strength to generate sales and to expand its market share, which includes it customization of products to fit its target market’s profile. Although Nestlé has not always started from scratch, the company has used acquisition as a penetration strategy to expand and penetrate new international markets, which eliminates any local barriers to its competition. A few weaknesses which are related to the company’s quality measure resulting in product recalls. The company has decentralized its strategy units into 7 subunits in charge for different product lines, for instance, one – for coffee and beverages; another one focuses on ice cream and milk products. Nestlé brings its management level employees all around the world for 2-3 week training in its headquarters in Switzerland to familiarize them with their global culture, strategy and given them access to the company’s top management.

Answer the below questions:

Question 1: Explain the modes of entry adopted by Nestle to enter the international market

Research theories related to gender and crime. Identify scholarly, peer-reviewed sources for use in this assignment.

Based on the scenario, your readings and research, respond to the following:

Select at least two different, contemporary theories that would apply to the case.

Employ the theories to explain why Natalie and her brothers have chosen different paths in life.

Give reasons in support of your responses.

Write your initial response in 4–6 paragraphs. Apply APA standards to citation of sources.

1. Howard has $60 per week to consume tacos and tortilla chips. He buys tacos and chips from the only store in his rural town, which charges $2 for a taco and $1 for chips. Howard only eats in combinations of 1 taco with 2 bags of chips.
   1. Using the utility-maximization model, graphically show a series of three indifference curves representing Howard’s preferences. (Explain any assumptions you make, and set up your model with tacos on the horizontal axis and chips on the vertical axis.)

2. Using the utility-maximization model, on a new graph, graphically show his optimal consumption bundle if he buys 15 tacos per week. Be sure to determine how many bags of chips he will consume.

3. On the same graph as (b), graphically show the income and substitution effects if the price of tacos increases.

4. Based on (c), explain how you know tacos and chips are normal or inferior goods.

Which of these items would be considered sexual harassment in the eyes of the law?

Which “type” of harassment is it:   Quid Pro Quo or Hostile Environment?  

1. A client pressures a salesperson for dates and sexual favors in exchange for a large purchase.

2. A supervisor requires that her assistant, a male, stay with her in her hotel room while they are out of town at a conference stating: “If you won’t agree to help me save expenses, I’ll find a new assistant who will.”

3. A male has asked two female co-workers to stop embarrassing him by telling jokes of a sexual nature and sharing their sexual fantasies, but they continue, telling him “you should appreciate the free advice!”

4. When she asked her co-workers to clean up their language, they no longer spoke directly to her but continued to use demeaning terms with each other, especially when referring to her within her earshot.

(1)A local entertainment establishment, in a small town, is trying to decide whether
it should increase its weekly advertising expenditure on a campus radio station. The
last six weeks of data on monthly revenue and radio advertising expenditure are
shown in the table below:
Week 1 2 3 4 5 6
Revenue ($000) 3.0 4.0 2.0 4.0 7.0 3.0
Advertising Expenditure ($00) 2.0 3.0 0.0 6.0 8.0 4.0
(a)Write a regression model that relates both variables in the “general” and
“specific” forms and briefly explain why the “specific” form is preferred.
(b) Estimate the parameters of the model and present your results in standard form.
Provide an interpretation of the results.
(c)Assume that in the following week #7, the firm planned to increase its advertising
expenditure to 9 (hundred) comment, briefly, on the expected impact of this new
spending on the firm’s total revenue according to this model.

BUSINESS LAW QUESTION

1. If Charlie is being accused of battery, could this be a criminal trial, a civil trial, or both?

Both

Neither
Civil
Criminal

2. Dave is starting a new company making high-end hoodies and needs to find distributors to move his product. He doesn't have any agreements with any distributors at the moment.

His brother Johnny hates Dave and wants to destroy his business, so he goes to all the distributors in town and offers them $5,000 if they refuse to enter into any contract with Dave.

Johnny has committed the tort of tortious interference with contract - true or false?

3. Which of these would be a defense to a claim of defamation, if the plaintiff were NOT a public figure?

a. The defendant believed they were telling the truth.

b. The defendant made the allegedly defamatory statement while they were testifying in a murder trial.

c. The defendant is not a public figure.

d. The defendant did not want to hurt the plaintiff's reputation.

Super Sneaker Company is evaluating two different materials, A and B, to be used to construct the soles of their new active shoe targeted to city high school students in Canada. While material B costs less than material A, the company suspects that mean wear for material B is greater than mean wear for material A. Two study designs were initially developed to test this suspicion. In both designs, Halifax was chosen as a representative city of the targeted market. In Study Design 1, 15 high school students were drawn at random from the Halifax School District database. After obtaining their shoe sizes, the company manufactured 15 pairs of shoes, each pair with one shoe having a sole constructed from material A and the other shoe, a sole constructed from material B.

After 3 months, the amount of wear in each shoe was recorded in standardized units as follows:

For this question, I would like help calculating the SA and SB - components of the test statistic - by hand. The SA I got was 1.7857x10^(-8), but I feel like that's incorrect.

Super Sneaker Company is evaluating two different materials, A and B, to be used to construct the soles of their new active shoe targeted to city high school students in Canada. While material B costs less than material A, the company suspects that mean wear for material B is greater than mean wear for material A. Two study designs were initially developed to test this suspicion. In both designs, Halifax was chosen as a representative city of the targeted market. In Study Design 1, 8 high school students were drawn at random from the Halifax School District database. After obtaining their shoe sizes, the company manufactured 8 pairs of shoes, each pair with one shoe having a sole constructed from material A and the other shoe, a sole constructed from material B.

After 3 months, the amount of wear in each shoe was recorded in standardized units as follows:

What is the 99% confidence interval for the difference in wear between material B and material A (use B-A)? Use software to get a more precise critical value, but confirm it's roughtly the same value you get from the table. Use at least 5 digits to the right of the decimal. Lower bound:  Upper bound:

Alternative hypothesis was: uA-uB < 0

Please Answer Question 2 Only

You have been contracted by the government of your country to provide recommendations on the regulation of the national textile industry. Currently, the textile industry which resembles features of the perfectly competitive market is completely unregulated. Using the concepts covered in the class, please provide your advice to the problems below.

1. One of the biggest social problems in the textile industry is child labour which, among other things, reduces school attendance. The government is considering two types of interventions and asked you to explain the process through which each of them affects the equilibrium amount of child labour and wages using words (explain the impact on demand and/or quantity demanded, supply, and/or quantity supplied as appropriate) and include well-labelled graphs.

a. Provide rewards for children who attend school [2pt]

b. Impose fines on employers who employ children [2pt]

2. Consider how own price elasticity of labour demand and supply affects the market outcomes for both policies. In addition to writing your answer in words, use well-labelled graphs to support your answer. Please draw new graphs, rather than using those from question 1.

a. How does own price elasticity of demand impact the effects of providing children who attend school with rewards on prices and the amount of child labour? [2pt]

b. How does the elasticity of supply impact the effectiveness of a fine on the employers who employ children? [2pt]